Non-core, non-performing assets can quickly become portfolio drainers. In contrast, timely and well executed divestitures create value for shareholders with more capital and management resources at hand to transform and strengthen core business. Berd Capital assists small and mid-sized companies with periodic portfolio health-checks to determine if keeping a business is essential to long-term profitability and growth, and whether the business is worth more held in the portfolio. Our approach focuses on articulating clear strategic and financial objectives, sharpening the performance focus, and helping companies benchmark growth and revenue targets. We take into account asset cost considerations, market conditions, and quantify divestiture scenarios to ensure anticipated value realization meets company’s present and future strategic goals.
Planning & Preparation
Ensuing divestment decision, Berd Capital engages in developing a robust plan and a qualified team with distinctive execution capabilities to steer the process. We further assess and determine the type of divestiture that will meet the company’s needs (e.g. outright sale vs. spin off with own shares) and lay out a communication strategy to convey the transaction rationale to the buyer and employees. Excellent understanding of the needs of potential buyers is key to identifying and negotiating with the ‘right’ acquirer. Our divestment approach entails intricate questions beyond how and whom to sell the business. We evaluate deal nuances such as impact on market, competition, employees, and determine which products, customers and regions will be included in the deal, as well as which specific assets will be separated from the company.
The key to maximizing the selling price is being able to see the divested business through the buyer’s eyes. Berd Capital operates on both sides of the market. Hence, we screen potential buyers based on the business’s value to them and conduct reverse due diligence to better capture underlying asset strengths and limitations. Understanding business growth cycle, market conditions and industry trends are all part of the analysis to determine the optimal timing for selling a business, when the acquirer can still extract value from operations and take the necessary steps to reignite profitable growth.
A successful divestment transaction is not solely confined to operational elements of an asset sale. It must ensure the value that can be unlocked in the process can clearly and reasonably benefit both parties. At Berd Capital, we make substantial effort to structure divestitures in ways as to enable both companies to remain profitable and competitive in the post-transaction era.